PENN Entertainment, Inc. Q3 FY2024 earnings call

• Strong year-over-year market share growth in Ohio, Massachusetts, and Kansas offset some declines; volume declines in South due to weather and hotel remodeling at L'Auberge Casino. - Four new growth projects on track, with Hollywood Joliet opening ahead of schedule in 2025. - Unveiled seven new ESPN BET branded retail sportsbooks; account linking between ESPN BET and ESPN is available, enhancing personalized sports betting experience. - Product enhancements like improved same game parlay, enhanced branding, and upgraded in-play betting coming soon. - Hollywood Casino app launch in Pennsylvania pending regulatory approval, with additional jurisdictions to follow.

The Interactive segment had adjusted revenues excluding skin tax gross-up of $141 million, with interactive adjusted EBITDA in the quarter a loss of $91 million. Retail revenue for the third quarter was $1.4 billion and adjusted EBITDA was $472 million. ESPN BET saw 127% year-over-year growth in monthly active users in Q3 2024 versus Q3 2023 and is approaching 4 million members in its digital database. Hollywood Casino experienced solid growth in the quarter, continuing into October, and the Hollywood Casino app in Pennsylvania is set to launch in early Q1 2025 subject to regulatory approval.

• Retail segment: Q4 2024 revenues range $1.36 billion to $1.38 billion, adjusted EBITDAR $440 million to $460 million. - Interactive segment: Reiterated midpoint of 2024 Interactive EBITA guidance. - 2024 corporate expense ~$105 million, total CapEx ~$500 million, cash interest expense ~$175 million, with a small tax refund expected.

• Severe weather disruptions and hotel remodeling in Lake Charles impacting South segment volume. - No new supply in Nebraska, Louisiana, and Chicago land posing pressure; need to reimagine properties to improve customer experience. - Hold percentage impact in Interactive segment due to customer-friendly outcomes affecting Q4 performance.

Q: Barry Jonas of Truist Securities asked about bridging the delta between ESPN's mass market focus and higher spend per user.

A: Jay Snowden discussed sequential growth in handle per user and focus on retention and monetization.

Q: Carlo Santarelli of Deutsche Bank asked about interactive guidance and 2025 outlook.

A: Jay Snowden and Todd George discussed seasonality, hold impact, and future plans.

Q: Brandt Montour of Barclays asked about fourth quarter interactive guidance and account linking success.

A: Jay Snowden and Aaron LaBerge talked about hold-related impact and high engagement with account linking.

Q: Joe Greff of JPMorgan asked about New York performance and slot volume growth.

A: Jay Snowden and Todd George discussed New York growth and broad-based slot volume growth.

Q: Joe Stauff of Susquehanna asked about OpEx in 2025 and account linking personalization.

A: Jay Snowden, Todd George, and Aaron LaBerge discussed OpEx outlook and personalized features via account linking.

Q: Shaun Kelley of Bank of America asked about online casino launch and cross sell.

A: Jay Snowden, Aaron LaBerge, and Todd George talked about online casino launch plans and cross sell opportunities.

Q: Dan Politzer of Wells Fargo asked about hold impact and iGaming database insights.

A: Jay Snowden discussed hold-related impact and iGaming database insights.

Q: Chad Beynon of Macquarie asked about Missouri sports betting vote and hold rates for non-NFL sports.

A: Jay Snowden talked about Missouri sports betting and hold rate seasonality.

Q: Bernie McTernan of Needham asked about account linking personalization progress.

A: Aaron LaBerge discussed account linking personalization progress.

Q: Jordan Bender of Citizens JMP asked about digital database breakdown and turn rates.

A: Jay Snowden discussed digital database breakdown and retention rates.

Q: Ryan Sigdahl of Craig-Hallum asked about player linking and Texas positioning.

A: Todd George and Jay Snowden talked about player linking and Texas positioning.

Q: Stephen Grambling of Morgan Stanley asked about Canada market and iGaming cross sell.

A: Jay Snowden discussed Canada market performance and iGaming cross sell opportunities.

Q: David Katz of Jefferies asked about property redeployment and Texas legalization.

A: Jay Snowden talked about property redeployment plans and Texas legalization interest